MOSCOW— A Russian woman who styled herself as “Bitmama” has been sentenced to seven years in a penal colony after orchestrating a $23 million Bitcoin pyramid scheme that preyed on Russians desperate to bypass Western sanctions. The case, which unfolded in the heart of Moscow’s luxury hotels, marks one of Russia’s largest recent crypto frauds and underscores the dangers of informal crypto dealings amid geopolitical tensions.
Valeria Fedyakina, a 30-year-old mother from Simferopol, posed as a seasoned cryptocurrency trader with alleged global offices. Prosecutors said she used this persona to lure investors into believing she could convert their roubles into Bitcoin abroad, specifically in Dubai, thereby skirting sanctions that have increasingly isolated Russia from traditional banking networks.
Dubai Crypto Promises Turn to Dust
According to Russian investigators, Fedyakina promised clients that their money would be transferred to Dubai, swapped into digital assets, and held safely outside the reach of Western restrictions. Instead, she allegedly funnelled funds through crypto wallets registered in the UAE, emptied client accounts, and pocketed millions.
“She did the crime under the guise of investing in her activities in the transportation and purchase and sale of oil, oil products, gold, and other minerals,” a spokesperson for the Investigative Committee of Russia told The Telegraph.
A Moscow court sentenced Fedyakina on June 24, ordering her to pay back the $23 million she stole. Prosecutors had initially sought the maximum 10-year sentence allowed under Russian fraud laws.
Millions Moved Daily in Moscow Hotels
Details from the case paint a picture of a scheme that operated at a staggering scale and speed. Local outlet Izvestia reported that clients brought $2–3 million (200–300 million roubles) daily to Fedyakina’s Moscow office, with the sums later ballooning to as much as $15 million (1.5 billion roubles) per day. Deals were reportedly closed inside upscale Moscow hotels, where “Bitmama” cultivated an image of sophistication and international reach.
She was arrested on September 15, 2023, while attempting to flee to the UAE. Despite being six months pregnant at the time, Fedyakina was taken into custody and gave birth while detained. She now remains with her infant daughter in Moscow’s SIZO No. 6 detention centre.
Exploiting Crypto’s Regulatory Gaps
Experts say the case highlights how criminal actors exploit regulatory loopholes in jurisdictions with lax Know Your Customer (KYC) and Anti-Money Laundering (AML) enforcement, particularly in crypto-friendly environments like parts of the UAE.
“Russian crypto criminals use regulatory arbitrage, setting up entities in looser jurisdictions to mask Russian origins, move funds cross-border, and exploit weak KYC/AML enforcement,” Deddy Lavid, CEO of blockchain security firm Cyvers, told Decrypt.
Alice Frei, head of security and compliance at Outset PR, said schemes like Fedyakina’s stand apart from state-sponsored operations. “Criminal schemes like Fedyakina’s are disorganised and opportunistic. They rely on funds from dispersed victims, often through scams, phishing, or false investment schemes,” Frei explained.
She added that fraudsters favour stablecoins like USDT or USDC for their predictable value and ease of cross-border movement, further complicating enforcement efforts.
Russia’s Complicated Relationship with Crypto
Fedyakina’s arrest and conviction come amid rising concerns about Russia’s broader use of cryptocurrency. As Western sanctions limit Russia’s financial options, both criminal enterprises and state actors have increasingly turned to digital assets.
A recent Reuters investigation revealed that Russia’s Federal Security Service (FSB) has used Bitcoin payments to compensate teenage spies operating across Europe, highlighting the technology’s utility for covert operations.
Meanwhile, U.S. authorities earlier this month charged Ian Mausner in a separate $500 million crypto fraud scheme. Prosecutors allege Mausner misled investors and funnelled funds into Russian-linked markets while concealing ties that could violate international sanctions.
Lessons from Bitmama’s Downfall
The “Bitmama” case serves as a stark reminder of the risks inherent in informal cryptocurrency investments, particularly those promising to evade international laws. As sanctions drive Russians towards alternatives like crypto, experts caution that the lure of quick, unregulated profits can leave individuals vulnerable to elaborate scams.
Authorities stress the need for stricter oversight and consumer awareness as Russia’s complex dance with digital currencies continues. For now, Fedyakina’s conviction stands as a high-profile cautionary tale for investors tempted by promises of effortless offshore wealth.
